Filing US Taxes while living abroad in New Zealand? What to expect for expats?

Yes, as a US citizen, you'll still need to file US tax returns even while living in New Zealand. The US taxes based on citizenship, not residency. The good news is there are provisions to prevent double taxation. Look into the Foreign Earned Income Exclusion (FEIE) which allows you to exclude up to $120,000 (for 2024) of foreign earned income from US taxation. Alternatively, you could use the Foreign Tax Credit, which gives you credit for taxes paid to New Zealand. Often the Foreign Tax Credit works better if NZ tax rates are higher than US rates. For your rental property in the US, that's still US-sourced income and will be taxed normally on your US return. You'll need to report rental income and expenses on Schedule E. Even if you break even or show a small loss, you still need to report it. Regarding your 401k, you can typically continue contributions if you're still employed by a US company, even while working abroad. However, this gets complicated if you're transferred to a foreign subsidiary, so check with your HR department. For the B&B business in NZ, if your husband (as a NZ citizen) is the sole owner and you have no ownership stake, you might avoid some US reporting requirements. However, if you're involved in the business, look into FBAR filing requirements and possibly Form 8938 for foreign financial assets.

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One thing nobody mentioned yet - look into whether you qualify for the Physical Presence Test or the Bona Fide Residence Test for the Foreign Earned Income Exclusion. You need to meet one of these to qualify, and they have different requirements. Physical Presence requires you to be physically present in a foreign country for 330 full days during a 12-month period. Bona Fide Residence requires you to be a genuine resident of a foreign country for an entire tax year (Jan-Dec). Since you're planning to live there permanently, Bona Fide will probably work better for you long-term, but you might need to use Physical Presence in your first year. Also, don't forget state taxes! Some states like California are notorious for trying to claim you're still a resident even after you move abroad. Make sure you properly terminate your state residency before leaving.

WARNING: You need to be super careful with your US brokerage accounts! Many US financial institutions will FREEZE or even CLOSE your accounts when they find out you have a foreign address. I moved to Australia and lost access to my Vanguard account until I could provide a US address (ended up using my parents'). Also, don't forget about PFIC rules if you invest in non-US mutual funds or ETFs in New Zealand - the tax treatment is BRUTAL. Stick with US-based investments through your existing accounts if possible.

Great question! I went through something similar when I moved to the UK a few years ago. A couple of additional points that might help: For your 401(k), you'll want to check if your employer's plan allows contributions while you're on international assignment. Some plans restrict this, but since you mentioned they have Auckland offices, they likely have experience with expat employees. Also consider that if you become an NZ tax resident, your 401(k) growth might be taxable in NZ even if it's tax-deferred in the US - definitely something to discuss with a tax advisor familiar with both systems. Regarding your rental property breaking even - don't forget about depreciation! Even if your cash flow is neutral, you can still claim depreciation on the property which often creates a tax loss on paper. This can be valuable for offsetting other income. One more tip: start keeping detailed records of everything NOW. Track your days in each country (for the physical presence test), keep receipts for moving expenses, and document your ties to NZ vs the US. The IRS loves documentation, and good records will save you headaches later. Also consider opening an account with a US bank that's expat-friendly (like Schwab International) before you move. It's much easier to establish these relationships while you still have a US address.